Blumenstein v. Philips Insurance Center, Inc.

Supreme Court of Alaska490 P.2d 1213 (1971)

Facts

Martin Dredging, Inc. (Martin) (defendant) purchased a ship called the Mermaid I from Bernard Blumenstein (plaintiff) to use for underwater gold-mining. Martin successfully used the Mermaid I on an initial project and then purchased a second vessel called the Mermaid II. Martin contracted with Philips Insurance Center, Inc. (Philips) (defendant) to insure the Mermaid II. Martin beached the Mermaid I at its original location and began working with the Mermaid II. The Mermaid II project was a failure. Martin became insolvent and unable to pay Blumenstein for the Mermaid I. Martin agreed to quitclaim the Mermaid I back to Blumenstein in full satisfaction of the debt. Blumenstein boarded the Mermaid I and performed various tasks, including removing equipment and preparing the ship for winter. However, he did not move the ship from its beached location. Meanwhile, Philips obtained a judgment against Martin for unpaid insurance premiums. Philips attached the Mermaid I, which meant that the ship could be used to satisfy Philips’s judgment. When Blumenstein saw the notice of attachment on the ship, he filed an intervening complaint in Philips’s suit against Martin. Blumenstein argued that the ship belonged to him because the quitclaim deed was executed prior to the attachment. Philips argued that the quitclaim deed was a fraudulent transfer because Martin was insolvent when it happened, and because Blumenstein never took possession of the ship. The trial court held that the transfer was presumably fraudulent. Blumenstein appealed.

Rule of Law

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Issue

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Holding and Reasoning (Connor, J.)

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